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Refining TO BE Models and Initiating Quick-Hit Plans
There is no firm rule on how many days should be allocated to developing TO BE solutions. It depends on the scope and complexity of the problems. But Day Two, defined as the day after a first-draft solution has been developed for each fish, begins with another round of review and editing.The appropriate question at this point isn't whether the solutions and associated assumptions need revision; it's how many and how much?Also, before-and-after illustrations will demand more detail and clarity—all with the goal of delivering a clear financial picture. In next week's steering team review, the executives are anticipating seeing the first clear map of the company's future, and the solutions need to be delivered simply enough for fast and easy understanding—yet with enough detail for full appreciation of their impact.For Fowlers, the TO BE material flow for CPFR involved four key changes. First would be more direct ships from suppliers to targeted retail warehouses; this changed connector lines on the geographic map. Before, material flowed from supplier to Fowlers warehouse to Fowlers warehouse to customer retail location. In the TO BE map, material would flow from supplier to customer regional warehouse.In the second key change, consigned inventory would be consolidated to fewer locations closer to the customer point of sale. Before, a specific inventory item was stored in all Fowlers warehouses. In the TO BE, the item would be stored in a single Fowlers warehouse and in designated customer regional warehouses.In the third key change, lead-time expectations were eased due to improved inventory position and aggregation; the result would be improved delivery reliability and reduced transportation costs.The fourth change optimized the flow of returned goods. Before, returns moved from customer locations to the closest Fowlers warehouse. In the TO BE, returned goods were consolidated at the customer regional warehouse and then shipped to a single Fowlers warehouse designated to accept all returns.The second agenda item on Day Two is to initiate quick-hit plans—one or two projects that will deliver fast ROI with a minimum of cultural change. There are two guidelines for this activity. First, the design team needs to prioritize the TO BE material flow solutions in a way that allows a certain number of changes to surface that can be acted on immediately without disruption to the greater effort. This quick-hit pile forms the basis for the goal of six-month cost neutral, and it builds momentum and credibility to reach two- to six-times return on investment over twelve months.You'll start with the disconnect opportunity grid (Figure 11-2), but will then take some of that information to create a new matrix. A balanced project mix grid (Figure 12-1), the new matrix considers a project's scope—tactical versus strategic—and the pace of change—fast versus measured. To find the quick hits, examine only the opportunities in the "easy" portion of the disconnect opportunity grid and place them on the new balanced project mix grid. Then, for quick hits, consider only those projects in the tactical/fast quadrant.
Figure 12-1: Balanced project mix grid.
The second guideline for initiating quick-hit plans is to effectively move ownership of quick-hit implementations to extended team members and others in the organization by developing a mini-charter. It's like the original project charter, but specific to the quick hits. Elements of the mini-charter include a summary of the issue and root cause analyses; recommended changes; action plans, responsibility, and timing; benefits as calculated in the opportunity spreadsheets; an implementation leader (extended team or other resources); implementation resources (including capital, expense, and people); and an implementation sponsor (steering team).In Fowlers' case, the quick-hit plan involved supplier shipments from the Pacific Rim (Figure 12-2).
ISSUE & ROOT CAUSE ANALYSIS Inbound shipments from Asia are consolidated by each supplier in quantities large enough to support full container shipments. While each shipment has low transportation cost, inventory value is high while flexibility and responsiveness are low. | |
RECOMMENDATION Set up a regional consolidation for all suppliers in the region. | |
ACTION PLAN Identify suppliers Identify service provider Define and pilot process Roll out changes | RESPONSIBILITIES/TIMING Sort supplier list and validate with business team—two weeks—Buyer/Planner Analyst Define third-party logistics requirements and issue request for proposal—four weeks—Transportation Analyst Develop and pilot changes—two weeks—Joint Plan and roll out consolidation—four weeks—Joint |
PAY-OFFS Quantify in terms of cost, cycle time, quality, and/or customer service $1,750,000 annualized transportation cost reduction 6 weeks lead time improvement 35% improvement in delivery reliability by purchase order | IMPLEMENTATION RESOURCES Full Time Equivalent (FTE) Personnel, Capital, and Expensed Items Two FTEs as identified for the duration defined in the responsibilities/timing section including a Buyer/Planner and Transportation Analyst |
IMPLEMENTATION LEADER Buyer/Planner | IMPLEMENTATION SPONSOR(S) Directors of Purchasing and Logistics |
CHARTER STATUS Approved as of Steering Team Review Five | |
Figure 12-2: Fowlers' Asia-Pacific transportation consolidation quick-hit mini-charter.
